As many as 374 of the nation's 381 metropolitan statistical areas (MSAs) – or 98% – are now facing increased risk of lower home prices at year-end 2010. But, the report adds, 212 of the country's MSAs still had a minimal to low risk of lower prices in two years.

The PMI report also indicates that 21 of the nation's 50 largest MSAs are now in the highest risk category, signifying the highest probability of lower house prices by the end of the fourth quarter of 2010, relative to the fourth quarter of 2008. Over the past several quarters, PMI has seen the risk rising fastest in the large urban centers across the country, while smaller MSAs have faired better in their current and projected price performance.

"As the recession deepened during the fourth quarter of 2008, increasing rates of unemployment and foreclosures continued to place downward pressure on house price appreciation," notes David Berson, PMI's chief economist and strategist. "Combined with upward movements in excess housing supply in many parts of the country, these deteriorating conditions are increasing risk of house price declines in the next two years."